If anyone had doubted that the world oil market’s affect on U.S. gas prices makes no sense, the current spike at the pump seems to have exposed the destructive nature of smarmy oil speculators.
The budding civil war in Libya is cited as a key factor, but Libya supplies just 3 percent of the world’s oil and 0.5 percent of U.S. imports. So, if Libya descends into further chaos and, for example, it’s oil flow is cut in half, that would mean a one-fourth of 1 percent loss for America. What’s more, the Saudis have promised to make up the difference if Libya’s oil supply falters.
Which begs the question: What’s with gas prices approaching $4 a gallon?
At the National Journal, they have concluded that the price spike is not based in reality. As lawmakers on Capitol Hill trade sound bites over high oil prices and Middle East unrest, one influential expert is seeking to allay cause for overreaction. “The market is responding to fear,” Daniel Yergin, chairman of the IHS Cambridge Energy Research Associates, told NJ’s Amy Harder. “Oil prices are not signaling a shortage of oil, it’s signaling political risk.”
But how significant is that risk when the pipelines in other Arab countries that are in an uproar have faced no attacks or threats? It’s worth noting that, of the top 10 nations who supply our oil, only two – Saudi Arabia and Iraq – are Arab nations. In fact, our two top suppliers are still our neighbors, Canada and Mexico.
But what irritates me most is that fat cat speculators drive these wild swings in crude oil prices, yet there isn’t much of a long-term correlation between gas prices and oil prices.
I took a look back to 10 years ago this week and came up with the official figures from the U.S. Energy Information Administration. In the first week of May 2001, world crude oil prices stood at approximately $24 a barrel, or nearly 80 percent less than current prices. The average price of gas in the U.S. was $148.9, or about 60 percent less than March 2011.
Let’s think about that for a moment. Oil prices have more than quadrupled over the past 10 years,  while gas prices rose by about 2 ½ times their prior mark. Do the math. If the pump prices are caused by oil prices, shouldn’t we already be paying $6 a gallon? 
The industry’s explanations don’t add up.